Kamikaze! The USD/JPY found itself spiraling down to new lows after breaking below the strong support at 94.50. After two failed attempts to pierce past the 94.50 mark, it looks like third time’s the charm! With no other major support levels in sight, the pair could keep tumbling down to the 87.20 level, which served as a support area at the start of this year. The stochastic is in oversold regions, which suggest that the pair could float higher for a bit. Previous support at 94.50 could have switched gears and turned into a resistance level. This is nearly in line with the 50% Fibonacci retracement level, which could serve as a ceiling for the price movement. But if the upward momentum is strong enough to bring the pair back above 94.50, then maybe – just maybe – we could chalk this up as a false break.
Remember the other day when I said that price action on the EURJPY pair was testing a strong trendline? Well now, its official = we have a broken trendline! The pair has been on a strong downtrend after hitting a high on June 5. The yen has gained the last 5 days, with its strongest move coming yesterday as the pair fell by over 300 pips! It appears that there could be some support at the 127.00 price level. With the pair falling the past 5 days, we may see a retracement and for the pair to rise to 130.00, where it may see some resistance as it is a psychologically significant number.
It seems like the four-hour USDCAD chart has got a nice looking uptrend channel going on there! It started way back on June 1 when buyers found support somewhere around the 1.0800 region. Upon hitting the support, traders just kept pushing the pair upwards little by little. Price is currently testing the 1.1700 handle as buyers are having a hard time piercing through. They tried to break through this region four times before but they have failed every time. With stochastic indicating that the pair might be overbought, will we see sellers take back control and drag the pair downwards again? If this happens, its next stop would be minor support at 1.1570. A clean break north, on the other hand, would most likely target psychological resistance at 1.1800.